The proposed bill, titled the "Housing Flexible Spending Account Act of 2025," aims to establish a state-administered program that enables Rhode Island employers to contribute to a housing flexible spending account (H-FSA) for their employees. The purpose of the program is to assist employees with qualified housing expenses, which include monthly rent or mortgage payments, down payments for first-time homebuyers, utilities, and property taxes.

Participation in the H-FSA program is voluntary for employers, who must contribute a minimum of $5,000 annually for all eligible employees to qualify for program benefits. Contributions made by employers will be treated as a pre-tax benefit and will not be subject to Rhode Island state income tax. Employee contributions to the H-FSA program are not permitted, as the program is entirely employer-funded. Only employees earning an annual salary of $125,000 or less will be eligible to receive employer contributions under this program.

The bill includes compliance and enforcement measures to ensure that employers do not reduce employee wages as a condition for making H-FSA contributions. Employers found in violation of these requirements may face penalties, including repayment of tax benefits and fines. The Rhode Island Department of Labor and Training will establish verification procedures to ensure compliance with contribution requirements.

The program will commence with a two-year pilot phase, during which data will be collected on participation rates, economic impact, and effectiveness. The Department of Revenue will submit an annual report to the General Assembly detailing the program's performance, fiscal impact, and recommendations for adjustments. At the conclusion of the pilot period, the General Assembly will review the program to determine whether to extend, modify, or terminate it. The act is set to take effect on January 1, 2026.